Mishcon de Reya comment

"In a seismic ruling, the Supreme Court has today ruled that the government acted unlawfully when it introduced Employment Tribunal fees in July 2013, and has ordered the fee system to be quashed.

"The fee for an individual bringing a claim in the Employment Tribunal was £390 or £1,200, depending on the type of claim. The introduction of fees for bringing claims in the Employment Tribunal caused the number of claims to fall by around 80%. In particular, it would appear that people have been put off bringing low value claims and claims where a monetary remedy was not being sought.

"The rule of law requires people to be able to enforce the rights that they have been given. In this instance, fees had the effect of denying them this ability. The Supreme Court has found that the current rules relating to fees have resulted in people being denied access to justice. While the government has tried to argue that those on low incomes could apply for a reduction in the fee, this was not sufficient to address the problems. The Court said that it was not enough to show that people could theoretically afford the fee: they must be reasonably able to afford it in reality. If a household could only afford the fee by forgoing an acceptable standard of living, the fee was not affordable. And even if someone could afford the fee, the fee still prevents access to justice in circumstances where the fee makes it irrational or futile to bring a claim.

"The fees also offend against EU law, which requires member states to give an adequate remedy if EU rights are infringed. The Court also found that the fees were indirectly discriminatory against women, having regard to the types of claim brought by women.

"The government has also promised to repay all those who paid fees over the last four years. This bill is likely to come to around £32 million. However, those who were put off bringing claims will not be compensated.

"This is going to have an enormous effect on employers and employees alike. Employers will need to be much more careful when dealing with employment issues, as the risk of a claim will now be much higher. ACAS will also face a challenge. At present, all potential claims must go through a process of early conciliation. If the number of potential claims rises as a result of this ruling, ACAS will need to find additional resources to cope with the increased workload. It will also be interesting to see how the unions cope with this. Some have observed that fees were, paradoxically, a useful recruiting tool for them, as the unions could offer additional protection for their members in circumstances where enforcing individual rights were more difficult.

"It is possible that the government will revisit fees. The judgment criticised the way in which fees were not proportionate and did not reflect the value of the claim. However, if a different approach was taken to the way in which fees were calculated, they may not fall foul of the principles upheld by the Court. That said, the government may decide that the issue is now too toxic to revisit, particularly given the relatively low amount of money the system was yielding."

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